When installing EM12c 12.1.0.2, one can choose to Skip or check for updates. With the proxy in place, and working, the OUI connects to some oracle update server.
The install detected patch 14145094, a so called AUTO UPDATES PLACE HOLDER BUG.

The Auto update feature in the EM Installer connects to the My Oracle Support (MOS) server to download the patch 4145094 ( this patch number was different was em 11g ) . This patch consists of a file called patch.xml which the installer
parses and creates a directory called “updates” to download all the updates. This directory has the following sub-directories: agent, oms and metadata

For 11g EM we had detailed explanation on how auto update works so look at it for more details MOS note: Overview of the "Auto Update" Feature Available with the Grid Control 11.1.0.1 Installer [ID 1099123.1

Checking monitor: must be configured to display at least 256 colors Failed <<<<
+>>> Could not execute auto check for display colors using command /usr/bin/xdpyinfo. Check if the DISPLAY variable is set.+

Some requirement checks failed. You must fulfill these requirements before

+continuing with the installation,Continue? (y/n) [n]+

because the prereq. are not good, the restart is expecting Y/N. And the restart is silent.